Why competitors matter for market orientation

Purpose – This paper aims to investigate whether it is meaningful to decompose market orientation into customer orientation and competitor orientation, and what possible implications this decomposition may have for researchers and business practitioners. Design/methodology/approach – Through a review of existing market orientation research, two of its salient dimensions, customer orientation and competitor orientation, are theoretically investigated. Then, two symmetric component measures are developed and tested on 308 manufacturing firms in a cross-sectional questionnaire survey, supplemented with census data. Findings – Empirical evidence reveals that, while competitor orientation is positively related to a firm’s market share, a customer orientation is detrimental to a firm’s return on assets for firms in less competitive environments. Research limitations/implications – The study advocates moving beyond “global” measures of market orientation and focusing on symmetric component measures of customer orientation and competitor orientation when investigating a firm’s performance differentials. The study’s cross-sectional setting limits inference about causality among the constructs. Practical implications – Customer versus competitor orientation appears to be contingent on a firm’s competitive environment, which indicates that market orientation and its components are not necessarily equally relevant for firms with different strategies and in different environments. Originality/value – The paper introduces and empirically tests two novel symmetric component measures of customer orientation and competitor orientation. Academicians are provided with insights with respect to the content and symmetry of component measures of the market orientation construct and their relation to firm performance. Furthermore, business practitioners are given a more solid foundation for better allocation of resources to their customer and competitor-oriented activities.